BGC Partners, Inc. (NASDAQ: BGCP), a small-cap inter-dealer broker of financial instruments, is taking the bold step of using the notice-and-access approach with its next earnings release on February 26 — but I think they should reconsider.
On Monday, the company issued a news release announcing the following:
“In compliance with the U.S. Securities and Exchange Commission’s (“SEC”) recent guidance regarding “notice-and-access” news releases, the Company plans to discontinue issuance of full-text financial news releases via a wire service and will issue only advisory press releases notifying investors when new and material information is available on its websites. BGC Partners plans to issue an advisory release after the close of market on Thursday, February 26, 2009, notifying the public that a complete and full-text financial results press release has become accessible at the “Investor Relations” section of www.bgcpartners.com. The complete release will also be available directly at any of the following web pages:
There’s no mention of the precise time the release will be made, only that it will be “after the close of market.” That’s not good practice since investors who want the information shouldn’t have to guess.
Thomson Reuters’ IR website platform isn’t ready for it
While I applaud BGC for making such an obvious move that will save money and give the company the opportunity to better engage its investors, I have many concerns about the company’s preparedness and its ability to accurately document its electronic disclosure process.
Monday’s news release itself suggests they are not familiar with the technical issues that bedevil disclosure on the web.
Notice how none of the URLs they provided contain the HTTP:// prefix. It’s well known that for URLs in distributed releases to be converted to active hyperlinks on disparate systems, it is important to include the prefix. Indeed the links in the version of the notice on the company’s own website were not active.
And that is just the start. BGC outsources its investor relations website to a unit of Thomson Reuters, which hosts several thousand IR websites of US companies. While I expect that Thomson Reuters’ servers will cope with the additional burden of investors all rushing to one place for the news, I have serious concerns that BGC will be exposed should something go wrong.
For example, there is no time-stamping or change log built into Thomson Reuters’ product. Their RSS feeds have been implemented poorly, including faulty time stamps. All items show the same entry time, as you can see in the screenshot below. This problem affects thousands of companies that are using Thomson Reuters’ and Shareholder.com’s platforms.
Meanwhile, these cookie-cutter platforms are notoriously inflexible, making it hard for clients to post information in the way they want and at a precise time they desire unless they do it manually.
I’ve railed against U.S. IR departments outsourcing their IR websites since the day I started this site. It’s a peculiarly U.S. thing, and there are many more issues I could list to show that Thomson and Shareholder.com’s products are not ready for the SEC’s website disclosure guidance.
Under a microscope from powerful interests with much to lose
Meanwhile, BGC will be under a microscope by the PR wire services, particularly Business Wire.
When Sun Microsystems, a network computing infrastructure company, did a trial of web disclosure in 2007, no less than Cathy Baron Tamraz, President and CEO of Business Wire, sat on Sun’s IR website hitting refresh constantly to get the news.
Yesterday, Reuters journalist Robert MacMillan accused BGC of being “opaque” in its disclosures, even though the company hasn’t yet used the process and he doesn’t have any basis on which to comment — yet.
I think MacMillan isn’t being kept well informed on the topic because he went further to say that there is nothing to prevent companies from burying information on their websites, which isn’t the case, as the SEC’s guidance makes clear.
And again, Business Wire didn’t lose time linking to MacMillan’s post. As I said earlier this week, they’ve launched a concerted PR offensive to stop their clients cutting their bills using notice-and-access releases. There’s a lot of money at stake.
The fact is, there are very powerful interests with deep, but threatened pockets that would love nothing more than to see BGC fail in its first notice-and-access release.
The detractors will be out in force, and who knows who will be sitting on their computers hitting BGC’s website on the day?